Uptrend's Account Talk

[Uptrend]

Here is my technical market update. My premise is that the FED will kill the market. Lets look at the 30 year bond yield:
View attachment 6408
You can see that the yield has breeched a long-term trend line (The longer the line the more importance and power of the relationship). It is now acting as resistance. The MACD has a bullish cross in late May. So what does this mean? As the long bond yield rises, so do mortgage rates and this will kill the recovery. Will the FED sell more. Yes, and this week on Thursday as seen in the link:
http://www.bloomberg.com/markets/ecalendar/index.html

Lets see if would be buyers will demand a high return, pushing the rates even higher. Across the Curve is a good read on the subject, and the author says in part " I believe that with a weekend to reflect on the data traders will reintroduce a steepening bias next week."
http://acrossthecurve.com/?p=6086

So the FED is stuck. They must sell bonds to finance the debt. Traders want more yield to counterbalance the risk of inflation down the road. And this will force bond prices down. And mortgage rates up.

 

[Uptrend]

The Fed is killing the market Part II. See my previous post for Part I

The US dollar looks like it wants to rise. See chart:
View attachment 6409
You can see the longer term trading channel (outside lines) and that we got a good bounce off support from last September. The MACD has a positive divergence as well as a bullish touch at Fridays close. The STO is heading higher, as well as the RSI. 84 and 87 are the levels to watch for overhead resistance.

The Euro looks like it wants to fall. See chart:
View attachment 6410
The Euro has been moving up recently and is running into overhead resistance. It is also at the top of it's shorter term trading channel. MACD is signaling a sell as well as a negative divergence on the histogram bars.

So hear is my take on the US Dollar and Euro. The US Dollar may rise for the next 1-2 months and the Euro may fall. This will kill the oil trade as well as other commodities, and will take a whack at the stock market. IMO the US Dollar fall from April 20 was holding up the US markets, but now that appears to be over. What could be causing this new demand for US dollars you ask? The FED selling too much debt in the form of bonds. This is creating adverse risk and steepening the yield curve.

This is a second proof that the FED is killing the markets over the next several months. They have no choice. Unintended consequenses.

 

[Uptrend]

Nothing has changed. Bonds yields are still weighing on the market. Let's see what happens at the 30 year long bond sale today at 4 PM EST

http://www.bloomberg.com/apps/news?pid=20601087&sid=aQp1wBqPdGkU

 

[coolhand]

As you know, I've been sitting in G for a month now, which hasn't really hurt me as the market hasn't done a whole lot in that time, but it's become obvious that there is a lot of underlying strength coming from somewhere. Lack of sellers and low volume moves higher have made it a real challenge to predict what this market's going to do in the next few weeks.

The SS could give another sell easily with enough weakness, but so far any weakness has been fleeting, pathetic attempts at taking the market down. Dip buyers continue to step in because that's what's working.

I have to admit, there really is a chance that we could make a big move in either direction. I'd like to think it's down, as my indicators say that's the most likely direction, but if the big players have other ideas it won't matter what those indicators say. On a global scale there is an effort to keep the markets afloat, regardless of fundamentals.

I'm still waiting for that catalyst that forces a marked move. Bonds appear to be that catalyst, but I'm thinking that unless oil retreats, we could be in for more strength.

I'm sticking by the SS in any event. I have to hang my hat on something.

 

[Uptrend]

Here is the situation as I see it:

US dollar is getting a bid as expected. As shown by the BRIC meeting this week, there is no alternative, and the USD is still the reserve currency of the world. The BRIC nations must buy our dollars to keep their export prices low relative to the US. The Euro is falling as expected (see previous posts chart). Oil should gap lower tomorrow. The strength of the USD will bring the market down. Also bad for the I fund. Initial breakdown levels to watch are spx 930 and dow 8600.

This is optionsX week. There are too many calls out there, and the market should go against it, pushing the indices lower.

The spx and dow have a pattern of declining daily volume for the last month, which can be interpreted that traders see more risk at the markets extended levels. This smells of a near-term correction.

The volatility index ($VIX) may breakout of it's bullish falling wedge pattern tomorrow near 29. This will be bearish for the markets.

The FED has more bond auctions planned. This should push yields up and bond prices down. Depends on demand, but it appears BRIC nations and others will be buying. However, there may be some flight to safety for market investors taking some dollars off the table. So, IMO bonds prices may have a tug of war.

It appears that a turning point in the market is near. There are additional divergences, and the fact that the market can get lower highs, but not higher highs lately. Taking FAZ and TZA positions (that are bought long), but 3x short the financials and small caps. TSP is G. Good luck.

 

[Pill]

Thanks Uptrend, I always enjoy your posts!!!

 

[Uptrend]

Very low volume sell-off today. There might be more gas in the engine? Let's see what happens in the last hour of trading.

 

[Uptrend]

The upside rally received a good dose of technical damage today. Now looking for a backtest (rising market) to spx 933. If that holds the downtrend could continue sometime this week.

 

[Uptrend]

This might be speculation on my part but:

1 This week was much to light volume with no conviction to the selling.
2 Real technical damage was done with the spx rising trendline taken out
3 This is options week and they tend to reverse the following week. There were way to many calls out there and so traders were taking advantage of the dumb money who made those options calls.
4 Sentiment is too negative -some folks think the market is done for in the near term and will fall. Example - Tom said in his commentary today: "Although I have been impressed with the recent consolidation, I am still expecting the worst."

Adding it all up $$$:
This looks like a bear trap setting up which would be ugly if you are in when it breaks. Meanwhile the market is getting set to rise. On the technical side, the spx made an intra-day low of 903 today. A W pattern might set up and play out and retest that level in the next day or two and then reverse to the upside and go test the broken spx rising channel trendline coming in around 935. Looks like a short high risk TSP play between those points. We saw a divergence today with tech wanting to rally.

If spx 903 is violated, then this little bounce play is out. Otherwise, if the level holds in the AM tomorrow, this could be a possible play worth a couple percent in price. I am thinking hum, (indecision) and pretty sure somthing similar will happen. Markets don't go straight down, even when the trend is that way. Good luck.

 

[coolhand]

This might be speculation on my part but:

1 This week was much to light volume with no conviction to the selling.

The volume has been light for some time, which begs the question, where is the big players? I'm hearing that a lot of the big money was selling during the latter stages of the rally. That was over a month ago. Since then this market has been getting pushed around by traders and folks who missed out on much of that run-up. Now the game may have changed to sell strength for many of those late comers.

But that's just more speculation.

 

[Uptrend]

The upmove happened to fast to do a TSP transfer today. The spx is came into resistance at 921.93, whcih was near previous gap resistance. If this hurdle is overcome, the market will probably go to spx 935, as that is the boundary of the broken uptrending channel, and that is probably the top of this feeble retest or bounce. The $NYAD line broke down below 0 several trading sessions ago, while the spx read 911. The AD line cannot get back to 0 today (-500), so the bears are still in control.

A good place to short the market will be at this second market advance top, either spx 921 or 935, and for sure below 911. I am looking for a correction to the spx 775-800 range as the summer unfolds. Happy trading.

 

[Uptrend]

Looking for support on Tuesady at spx 880, and then sideways trading and formation of a right shoulder in the coming week for the H&S pattern forming over the last month. There couold be possible choppy action above spx 880 to spx 930 and backtest of the broken trendline for a max price movement of +4.4% above the neckline. With the big move today and the formation of the bearish evening star (last 3 days candlestick pattern), IMO tomorrow will set up a doji candelstick (indecision) after a bounce off of support near spx 880 (the neckline).

The break below the neckline measures to 824, coming in between a 38.2 and 50% Fib retracement (of the entire upmove since March 6) at spx 845 and spx 811. A 61.8% retracement is also possible, coming in at spx 779. BTW, there is also is a larger inverse H&S pattern with the left shoulder last Nov 08 at 741, the low of 666 forming the head and the possible right shoulder of 779. This pattern measures to around spx 1246. Something to shoot for in the coming months.

So, this TSP IFT, if you wish to play, is short in duration, high risk and a fair bet to rise, as MACD and stochastics will also give the buy signal. However, a reversal off the new lower high towards the neckline of the H&S pattern in play is dangerous, and traders must exit, once the lower high (at or below spx 930 is attained). If this happens intraday, one might lose some of the trade. IMO S fund or C/S split should be the strongest. With a stronger dollar lately, I is getting hurt.

 

[Uptrend]

SPX 890 is being tested. It should hold so, I will make a TSP decision within an hour. Looks like a trade setting up.

 

[Uptrend]

Went 70% S 30% C Expecting a bounce off of 880, either today or intraday tomorrow, which should setup for a end of the month run back up towards spx 930. I realize this is a medium to high risk trade - but here goes

 

[coolhand]

Went 70% S 30% C Expecting a bounce off of 880, either today or intraday tomorrow, which should setup for a end of the month run back up towards spx 930. I realize this is a medium to high risk trade - but here goes

I'll be surprised if we bounce that low, but they might try to shake out some weak hands before turning it up much higher. FWIW, looking for a run to start between now and tomorrow morning.

 

[Steadygain]

I realize this is a medium to high risk trade - but here goes

The THRILL of being in the game is worth the loss and you can always bail if need be.


I hope you come out doing great!

 

[Bullitt]

Uptrend- Any thoughts on where we might be on the current Elliot Wave count?

 

[Uptrend]

Bullitt:

Look at the SPX 60 min chart and SPX daily located here:

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987

On the daily, Major C: wave 1 SPX 876, wave 2 SPX 827, wave 3 SPX 930, wave 4 SPX 879, and wave 5 SPX 956. This is a classic EWT 1-2-3-4-5 up pattern. So, we should now be in abc corrective pattern against the grain. Looking at the SPX 60 min chart it appears we have the 1 and 2 waves, and may be completing the 3 wave for 3 of 5 to complete A in the zigzag down. Wave 4 of A should not violate the top of wave 2 at 927 for this count to work. That is my interpretation anyway. Hope this helps.

 

[Uptrend]

I see we had a golden touch on the spx today with the 50 sma touching the 200 sma and attempting a cross. Normally this is very bullish, but this time I am not so sure. Elliot wave count supports a minor move to no higher than spx 927 on a retracement move (unless the count is not correct). Way too bearish sentiment supports a minor upmove, as well as end of month seasonality. There is strong support at spx 876-880. That is why I made a transfer in on Tuesday.

Here is a spx chart:
View attachment 6477

I have marked the possible shoulders and head in a Head & Shoulders pattern forming. The neckline is at 880. Breakdown would project to 804 as I have shown. I also marked the golden cross. In order for this pattern to work, the market must go back up and complete the right shoulder that would more or less match the left shoulder. Happy trading everyone!

 

[airlift]

Uptrend,

Thanks for your analysis. It is supportive and consistent with other views from different perspectives that call for a very possible ongoing short-term upside. It is a very useful analysis that will benefit all!